Receiving funds without a low-income designation

Deposit networks and reciprocal deposits have the potential to provide significant value to credit unions and their members alike. For credit unions looking to maximize the benefits offered by reciprocal deposits, being able to both sweep funds into the network and receive funds back is critical. For Low-Income Designated (LID) credit unions able to accept nonmember deposits[1], receiving funds is straightforward. For non-LID credit unions looking to receive funds from the network, it is essential that they be member deposits.

ModernFi is committed to partnering with you to deliver the full benefits of reciprocal deposits to your credit union and its members. Below, we’ve outlined how non-LID credit unions can receive eligible member funds from the deposit network.

Step-by-Step Process for Receiving Member Shares

1. Depositors at other participating credit unions in the ModernFi network open an account and sweep funds into the network
   Shares are swept to credit unions in the network in allocations under the $250k standard maximum share insurance amount (SMSIA), allowing the member to benefit from extended levels of insurance[2].

2. During the account opening process, eligible depositors at other credit unions are presented with the option to become a member at your credit union
   ModernFi works with your credit union to understand its Field of Membership (FoM) and present a membership option to depositors at network CUs that are eligible in your FoM. The depositors agree to your membership agreement, are presented with proper disclosures, and consent to ModernFi acting on their behalf to open a membership at your CU.

3. ModernFi collects and stores the executed membership agreement, confirms membership eligibility, and retains all records.
   Necessary identification data is stored securely by ModernFi, and ModernFi attests to the eligibility of the member and the proper execution of your membership agreement. KYC checks on the member have already been completed by the credit union sweeping the member’s deposits into the network, which attest to having proper controls and reviews in place, so no personal data is needed to be exchanged with your credit union.

4. ModernFi delivers eligible member funds to your credit union, enabling you to receive deposits from the ModernFi network.
   As additional network depositors become members at your credit union, ModernFi will send eligible deposits from the network to your credit union’s Program Account via domestic wire. ModernFi’s proprietary algorithm ensures only eligible member funds are routed to your credit union.

Additional Details: AML/KYC

For all deposits swept into the ModernFi network, KYC is completed by the source credit union from where the funds originated. This is the standard KYC process for deposit networks, and all participating institutions must attest to the compliance and maintenance of their KYC / CIP program.

Credit Unions can always view which credit unions are supplying their deposits in the Admin Portal under the Source of Funds tab.

[1] LID credit unions may accept nonmember funds subject to certain considerations outlined by NCUA Regulations.
[2] Insurance provided by program credit unions (subject to meeting certain conditions)